Chicago | Reuters — U.S. corn and soybean futures bounced on short-covering on Monday, after large supplies earlier knocked nearby contracts to their lowest levels in more than three years, traders said.
Front-month Chicago Board of Trade corn Cc1 recovered to settle above$4 per bushel, a benchmark level the market breached on Friday for the first time since November 2020. The nearby contract has tumbled about 14 per cent this year and is down 37 per cent from a year ago, after record U.S. and Brazilian harvests.
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Corn and soybean yields in the United States were left unchanged in the latest supply/demand estimates from the U.S. Department of Agriculture, released July 11, although a reduction in harvested area led to small downward revisions to production for the crops.
U.S. farmers must grapple with large corn inventories from last year’s harvest and with limited demand for feed from livestock producers, who reduced the nation’s cattle herd to its smallest level in seven decades. The United States also faces stiff competition for global grain and soy export sales.
The corn market remains vulnerable to bouts of short-covering by speculators, though, analysts said. Money managers increased their net short position in CBOT futures and options to a record 340,732 contracts in the week ended Feb. 20.
“Today’s trade was speculative and technical, with corn shorts at a record as of nearly a week ago and outside commodity markets trading higher,” said Terry Reilly, senior agricultural strategist for Marex.
CBOT March corn CH24 ended up 7-1/4 cents at $4.07 a bushel, after falling to a contract low of $3.94-1/2. March soybeans SH24 rebounded from a contract low of $11.24-3/4 per bushel to end up 3 cents at $11.36.
Wheat also closed higher, with CBOT March futures WH24 rising 3-3/4 cents to $5.77-1/4 per bushel.
Market participants adjusted positions ahead of first notice day for March futures on Thursday, brokers said.
Traders will watch for unfavorable U.S. weather and potential disruptions to spring plantings as factors that could trigger further short covering in the coming weeks.
“We can argue there’s dryness for Iowa and parts of Nebraska. We can argue the summer weather outlook for the Plains might be a bit dry,” said Rich Nelson, chief strategist for brokerage Allendale. “Those are valid issues. It’s probably not time to trade those yet.”
–Additional reporting for Reuters by Michael Hogan in Hamburg and Naveen Thukral in Singapore.
